We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Healthcare Realty Trust Inc (NYSE:HR) based on that data.
Is Healthcare Realty Trust Inc (NYSE:HR) a buy, sell, or hold? The smart money is in a pessimistic mood. The number of bullish hedge fund positions were cut by 1 lately. Our calculations also showed that HR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a peek at the fresh hedge fund action encompassing Healthcare Realty Trust Inc (NYSE:HR).
How are hedge funds trading Healthcare Realty Trust Inc (NYSE:HR)?
Heading into the first quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HR over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Balyasny Asset Management was the largest shareholder of Healthcare Realty Trust Inc (NYSE:HR), with a stake worth $16.6 million reported as of the end of September. Trailing Balyasny Asset Management was Winton Capital Management, which amassed a stake valued at $12.8 million. Impax Asset Management, Sandler Capital Management, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Sandler Capital Management allocated the biggest weight to Healthcare Realty Trust Inc (NYSE:HR), around 0.4% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.18 percent of its 13F equity portfolio to HR.
Seeing as Healthcare Realty Trust Inc (NYSE:HR) has experienced falling interest from hedge fund managers, we can see that there lies a certain “tier” of hedge funds that slashed their full holdings in the third quarter. At the top of the heap, D. E. Shaw’s D E Shaw dumped the biggest investment of the 750 funds watched by Insider Monkey, totaling an estimated $1.2 million in stock. Steve Cohen’s fund, Point72 Asset Management, also said goodbye to its stock, about $0.2 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Healthcare Realty Trust Inc (NYSE:HR) but similarly valued. These stocks are Pure Storage, Inc. (NYSE:PSTG), Enstar Group Ltd. (NASDAQ:ESGR), GrubHub Inc (NYSE:GRUB), and VEON Ltd. (NASDAQ:VEON). This group of stocks’ market valuations are similar to HR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSTG | 29 | 469978 | -6 |
| ESGR | 13 | 440083 | 0 |
| GRUB | 33 | 527926 | 8 |
| VEON | 11 | 65909 | 0 |
| Average | 21.5 | 375974 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $376 million. That figure was $51 million in HR’s case. GrubHub Inc (NYSE:GRUB) is the most popular stock in this table. On the other hand VEON Ltd. (NASDAQ:VEON) is the least popular one with only 11 bullish hedge fund positions. Healthcare Realty Trust Inc (NYSE:HR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. A small number of hedge funds were also right about betting on HR, though not to the same extent, as the stock returned -21.6% during the same time period and outperformed the market.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
